What will happen to the meme coin market if Trump wins the presidential election?

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As a seasoned analyst with over two decades of experience in the financial markets, I find myself intrigued by the ongoing debate surrounding the impact of the U.S. presidential election on the crypto market, particularly meme coins. Having navigated through various market cycles and witnessed firsthand the dynamics of political influence on economic trends, I believe there’s a grain of truth in both arguments presented here.

A number of analysts contend that Donald Trump’s presence could have a more favorable effect on the cryptocurrency market compared to Kamala Harris. Yet, opinions differ regarding how this might play out in the realm of meme coins.

Based on the observations of Professor Omid Malekan from Columbia Business School, if Trump wins the election, it might have a detrimental effect on the market for meme coins.

To strengthen my rapport with Solana enthusiasts, let me share a perspective on why a Trump victory or Republican sweep (currently estimated at 50% by Polymarket) could negatively impact memecoins.

— Omid Malekan 🧙🏽‍♂️ (@malekanoms) October 27, 2024

The expert pointed out that investor enthusiasm for meme coins is rising because they’re dissatisfied with the economic structures of venture-backed ventures. If Trump gets re-elected, there might be modifications to rules within the Republican Party that would let token holders receive dividends and fees, potentially diminishing interest in meme coins.

Meme coins as a response to SEC policies

Meme coins have emerged as a reaction to strict SEC policies. If Republicans, with Donald Trump leading, win, there could be a softening of these policies, which, according to Nic Carter, the co-founder and general partner of Castle Island Ventures, might cause a decrease in the value of meme coins.

Omid Malekan, a professor at Columbia Business School, made a comment regarding a publication. In this comment, he encouraged the community of the Solana project to back the Democratic Party candidates in the upcoming presidential election, specifically Kamala Harris.

The expert argued his opinion as follows:

  • Meme coins represent economic populism and a protest against traditional crypto assets and the participation of venture investors.
  • Institutionally funded projects are becoming a response to SEC Chairman Gary Gensler’s and Senator Elizabeth Warren’s “repressive policies.”
  • A Republican victory could strengthen the position of significant traditional crypto assets. This will introduce economic mechanisms to token holders who are absent from meme coins.

As an analyst, I affirm that stricter regulation of the cryptocurrency market within the U.S. could potentially have a bearish impact on meme coins. My colleague, Malekan, and I share this viewpoint. He expounded that if the Securities and Exchange Commission (SEC) modifies its stance, it might lead to a decrease in demand for meme coins. However, he also emphasized that the existing speculative interests will keep the market from vanishing entirely.

Opinions from the crypto community

Different individuals have varying responses to these statements. Blogger and social media influencer Murad asserts that the surge in meme coin popularity stems from economic rather than political influences, suggesting that the outcome of elections will have minimal impact on this market sector.

99% of Memecoin buyers primarily focus on financial gains rather than political affairs, as broader economic trends such as the continually increasing global money supply have a greater impact on their investments. These trends would continue regardless of who is in power, such as President Trump.

— Murad 💹🧲 (@MustStopMurad) October 27, 2024

A well-known blogger by the name of Jordan Fish, often recognized as Cobie, shares a differing viewpoint from Malekan and Carter. He underlines the fact that the enthusiasm for meme coins among average traders persists, as they are typically excluded from participating in major projects during their initial stages.

Meme coins and the U.S. Election

2024 marked a significant growth spurt for the meme coin sector within the crypto market, surging by an impressive 1800% since the year’s start. Interestingly, as the U.S. election approached, coins linked to Donald Trump experienced a notable surge in trading activity and value.

In comparison to the broader meme coin market, this particular category has a relatively modest value. According to Coingecko, it’s worth approximately $1.2 billion, which equates to around 2.4%. Interestingly, only four coins in this category have a capitalization above $100 million. Despite its size, it still managed to garner significant interest from the crypto community.

According to Forest Przybysz, who’s both a trader and CEO of Sistine Research, the appeal of meme coins largely depends on the focus they attract. The greater the spotlight, the higher their worth tends to climb.

“Trump is an attention magnet. Therefore he is the ideal subject for a meme token.”

Forrest Przybysz, a cryptocurrency trader and CEO of Sistine Research

As a research analyst, I would highlight that meme coins like Yan Liberman, co-founder of Delphi Digital, does, serve primarily as collectible assets. These digital tokens capitalize on public interest and attention, thereby providing an avenue for monetization.

Meme coins, like NFTs, serve as collector’s items. Essentially, they capitalize on public interest by turning it into financial value.

Yan Liberman, co-founder at crypto research firm Delphi Digital

In essence, should Trump’s proposed policies in office lead to their fulfillment, it could spark a significant growth spurt within the cryptocurrency sector. Nevertheless, the future of meme coins is uncertain; they are not expected to provide substantial practical use or contribute significantly to the advancement of decentralized finance.

Regardless of the route taken, the cryptocurrency market is expected to experience fluctuations as the U.S. presidential elections draw near. However, it remains uncertain exactly what form this volatility might take.

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2024-10-29 03:00